- EUR/GBP extended its sideways consolidative price action for the second straight session on Friday.
- Positive Brexit-related headlines underpinned the British pound and capped any meaningful upside.
- The shared currency had a rather muted reaction to the release of the prelim Eurozone GDP report.
The EUR/GBP cross extended its sideways consolidative price action and seesawed between tepid gains/minor losses through the early European session.
The cross struggled to capitalize on this week’s goodish bounce from near one-month lows and has been oscillating in a narrow trading band – below mid-0.9000s – over the past two trading sessions. A modest pickup in demand for the British pound was seen as one of the key factors capping any meaningful upside for the EUR/GBP cross.
The sterling’s relative outperformance against its European counterpart could be attributed to some positive Brexit-related headlines. In fact, the UK chief negotiator David Frost said on Thursday that a Brexit agreement can be reached in September. This comes ahead of another round of negotiations next week and indicated that both sides remain committed to reaching a deal.
On the other hand, the shared currency struggled to gain any meaningful traction and prolonged its subdued price action following the release of the preliminary Eurozone GDP report (second reading). The latest figures released by Eurostat confirmed that the region’s economic output contracted 12.1% QoQ during the second quarter of 2020.
Meanwhile, the lack of any fresh buying interest indicates that the recent bounce from the 0.8970 region might have already run out of the steam and supports prospects for the resumption of the recent downfall. However, it will be prudent to wait for a sustained break below the key 0.9000 psychological mark before positioning for any further depreciating move.
Technical levels to watch
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